Do technical factors and considerations affect the price of mining shares? Do savvy investors even consider technical, as in scientific and engineering, factors in deciding to buy or sell stock in mining companies? I have no way of knowing. Here are some news and views snippets that may help us decide. In some cases, the share prices fell on the news, but most often the news made little difference.

Kisladag and the Court

The Turkish High Court issued an order that in effect shuts down Eldorado Gold’s Kisladag mine in Turkey while the court takes a summer vacation before returning to consider the merits of the case. As the order comes from Turkey’s highest court there is no appeal. Seems the basic issue is the Environmental Impact Statement (EIS) which a lower court reportedly approved as sufficient. Now it appears that the high court is not happy with the way the question of the mine’s water balance or its plans for closing the open pit are dealt with.

Some reports imply that the court’s decision is founded in the politics of an upcoming Turkish election. Some reports imply that the court’s decision is founded in the conflict between the religious right in Turkey (who presumably want no mining that would bring modern views to the youth best keep in ignorance) and the democratic left (who presumably want business & freedom.) Some reports imply that it is just that the court is too eager to get off on their summer holidays, so had no interest or time to consider the technical merits of the case.

Let’s face it: if they cannot close the pit in such a way that acid mine drainage is not a perpetual problem, then the mine is doomed. At the very least they may have to face increased closure costs to backfill the pit. Maybe they will have to lodge closure bonds or money with the Turkish government to provide for closure costs, and that may reduce earnings. Here is what Mine Sites (Kisladag) tells us about the mine’s water supply:

"Infrastructure to support the mine includes an access road, a water well field with a 13-kilometer water pipeline, and a 30-kilometer power transmission line."

and

"Numerous initiatives have been undertaken to enhance the well-being of the neighbouring community. The most notable of these initiatives is the installation of a water distribution system to the surrounding villages and settlements. The system consists of a central well, underground water lines, and reservoir tanks and delivers water to more than 1000 local residents in nine villages for the first time."

Columbia River Cleanup

The U.S. Justice Department and the Environmental Protection Agency have announced that Kennecott Utah Copper, the second largest domestic U.S. copper producer, has agreed to abide by the terms of a federal consent decree to continue to implement a comprehensive cleanup of groundwater contamination from past mining operations related to the massive Bingham Canyon copper mine. Cleanup is expected to cost at least $15 million and take more than 40 years to complete. Kennecott will also pay $5 million for costs associated with prior federal investigations and other EPA actions at the site and surrounding areas.

There is little new news here, although a great deal to be learnt. The consent decree merely formalizes methods to enforce a Record of Decision (ROD) finalized seven years ago—the wheels of justice grind slowly. These are the elements of the selected remedy:

  1. Continue source control as administered through the State of Utah Groundwater Protection Program.
  2. Prevent human exposure to unacceptably high concentrations of hazardous substances and/.or pollutants or contaminants by limiting access to the contaminated groundwater. Institutional controls include purchase of land, purchase of water rights, limiting drilling wells and increased pumping of nearby old wells.
  3. Prevent human exposure to unacceptably high concentrations of hazardous substances and/or pollutants or contaminants through point-of-use management which includes providing in-house treatment unit to residents with impacted wells, replacement of their water by hooking the properties up to municipal drinking and/or secondary supplies, and/or modifying their wells to reach uncontaminated waters.
  4. Contain the acid plume in Zone A by installation of barrier wells at the leading edge of the contamination, pump and treat the waters to provide a hydraulic barrier to further plume movement while providing treated water for municipal use.
  5. Withdraw the heavily contaminated waters from the core of the acid plume in Zone A and treat these contaminated waters using pretreatment with nanofiltrations of equivalents technology, followed with reverse osmosis to provide drinking water quality water for municipal use.
Pascua Lama and Glaciers

Canadian Prime Minister Steven Harper defended the Pascua Lama mine which straddles the Chile and Argentinean borders on his visit to Santiago. He is reported to have said that Canada abides by Canadian standards of corporate social responsibility and that it is up to Chile and Argentina to decide whether it is meeting environmental protection standards. The report does not make clear whether the “it” refers to Canada or to Chile and Argentina.

There does seem to be a vocal and powerful opposition developing. Witness this snippet from the report: “a committee of lawmakers from Chile’s chamber of deputies is studying accusations that the gold and silver mine project is harming the local environment and displacing indigenous populations. Over the past several weeks, they have heard from representatives of the region around the mine who say they have witnessed irrevocable damage to glaciers that are essential to their agriculture and water supply. Some of the federal politicians have expressed a willingness to start up a full-scale investigation into allegations of improper environmental assessments during the mine’s approval process.”

Personally I found the most fascinating part of the report the part where the miners blame global warming for shrinking glaciers in the vicinity of the mine. Most miners I know deny that global warming is occurring. The Colorado Mining Association’s website is vehement in opposition to the reality thereof. Seems that “facts” are twistable to needs. At least from this case we will get clarity on the adequacy of Canadian laws, justification or repudiation of Canadian environmental practices, a finding on the rights of nations to manage their own affairs, and a final rendering of the truth or falsity of global warming and its impact on mines.

Cameco and Soil Contamination

Cameco has stopped over 420 people from working at their Ontario uranium hexafluoride conversion plant because they found uranium and "evidence of other production-associate chemicals in the soil." In the announcement, Cameco also said that holes are being drilled around the area and the soil and groundwater are being tested to ascertain the area affected. The quantity of information in the news reports varies immensely, but one report stated that "the affected area of soil appears to be within and near perimeter walls of its UF6 plant."

The most amazing reporting is this gloss-piece: "Due to the nature of soil at the plant, Cameco expects the ground water flow rate, with the chemicals, to average approximately 40 to 60 metres each year. The perimeter of the plant is about 70 metres from the edge of the property. This provides ample time to address, contain and mitigate the affected area. Cameco has monitoring wells around the property to detect chemicals in the area. These wells are checked quarterly and reported to the regulator annually. The last scheduled samples were taken in April and did not indicate potential issues. Cameco has arranged for additional samples to be taken."

Contaminated groundwater could be well past the monitoring wells by now if the release occurred more than about a year ago. Check my arithmetic. Cameco did not check theirs in making this statement.